ABC, and (2) the conp P17-2A Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,600, and a new model, the Majestic, which sells for $1,300. The pro- duction cost computed per unit under traditional costing for each model in 2017 was as follows. ts Royale Majestic Traditional Costing Direct materials Direct labor ($20 per hour) Manufacturing overhead ($38 per DLH) Total per unit cost 700 120 228 $420 100 190 $1,048 $710 In 2017, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $38 per direct labor hour was determined by dividing total expected manufacturing overhead of $7,600,000 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $552 ($1,600 - $1,048) and Majestic $590 ($1,300 sideri $710). Because of this difference, managem ng phasing out the Royale model and increasing the production of the Majestic model. Before finalizing its decision, management asks Schultz's controller to prepare an analysis using activity-based costing (ABC). The controller accumulates the following in formation about overhead for the year ended December 31, 2017 Activity Based Overhead Rate $30/order $50/setup $40/hour $25/inspection Expected Use of Activity Estimated Cost Drivers Overhead Cost Drivers Cost Pools Purchasing Machine setups Machining Quality control $1,200,000 900,000 4,800,000 700,000 40,000 18,000 120,000 28,000 Number of orders Number of setups Machine hours Number of inspections